The acrid smell of burning rubber and a couple of strange noises were the first signs that Faridah Merchant's morning bus ride was about to go terribly wrong.

The 22-year-old was sitting near the back of the L94 bus, making a regular trip from the eastern suburbs to her work at a women's accessories store in the city, when a woman yelled: "Oh my God, the bus is on fire".

The bus driver was panicked as well, his face went red, and he didn't know what to do. It was just horrible. I've never been in such a situation in my life. You don't think it's ever going to happen to you. I was very shaken. I'm OK now, but I'm still in shock

Ms Merchant saw plumes of black smoke out the window and said the bus "got very, very hot", before the driver pulled over on Oxford Street, Darlinghurst, about 9.30am today.